2017Guhap10067 Nullification of approval for conversion into rental housing

A Stock Company

Seoul High Court Decision 200

Attorney Jeong-won

Law Firm LLC (LLC) LLC, Counsel for the defendant-appellant

Attorney Park Jong-tae, Lee Jong-tae, Lee-tae, Lee Jae-chul

Law Firm LLC et al., Counsel for defendant-appellant

Attorney Park Jae-chul, Counsel for the plaintiff-appellant

Attorney Lee Jae-hoon, Counsel for the defendant-appellant

Fire Fighting Forces;

Law Firm Ppuri, Counsel for the defendant-appellant

[Defendant-Appellant]

June 13, 2019

July 25, 2019

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

In July 5, 2016, it is confirmed that a disposition of approval for conversion into sale in lots of rental housing stated in the attached Form is null and void.

1. Details of the disposition;

A. The Plaintiff is a rental business operator for the purpose of civil engineering, construction, lease of real estate, and sale, and is running a housing rental business until now after being registered as a rental business operator on December 12, 1994.

B. On September 22, 1995, the Plaintiff constructed a B apartment in the Jeonnam-gun (hereinafter referred to as “the apartment of this case”) and received a report on the terms and conditions as follows, and the Defendant issued a report on the terms and conditions of lease to the Plaintiff.

Rental housing: Rental housing period for 285 households (33 households of 39.84 square meters of exclusive use area, 252 households of 50 square meters of exclusive use area): The sale price calculation standard for September 29, 1995, 30 September 29, 1996: the average price of construction cost and appraisal price in accordance with the guidelines for the construction and management of public rental housing: Provided, That in such cases, it shall not exceed the amount calculated by deducting depreciation costs during the rental period from the sale price (e.g., the sale price of the relevant housing calculated in accordance with the guidelines for the implementation of the cost-sharing system at the time of conversion of sale.

C. On May 23, 2016, the council of lessees’ representatives, composed of lessees of the instant apartment, applied for approval for conversion of rental housing to the Defendant, and the Defendant approved the said application on July 5, 2016 (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 8 and 9, the purport of the whole pleadings

2. The plaintiff's assertion

The instant disposition is null and void because there is a serious defect as follows.

(a) A lessee's no right to apply for approval for conversion for sale;

The lessee’s right to apply for approval for conversion for sale in lots is the right recognized under Article 21(5) of the former Rental Housing Act (wholly amended by Act No. 8966, Mar. 21, 2008; Act No. 9863, Dec. 29, 2009). Article 3 of the Addenda of the said Rental Housing Act (Article 896, Mar. 21, 2008; hereinafter referred to as “the Addenda provision of this case”) provides that “The amended provisions of Article 21 shall not apply to rental business operators who submit a plan for conversion in lots at the time of entry into force of this Act or who applied for permission for conversion in lots.” In the instant apartment, Article 21 of the former Rental Housing Act does not apply to the lessee of the instant apartment after the period of mandatory lease expires before the said Rental Housing Act enters into force, so there is no right to apply for approval for conversion in lots.

B. Since the basic nature of the lessee’s right to apply for approval for conversion of rental housing for sale in lots, the lessee’s right to expect conversion of rental housing for sale in lots or right to apply for approval for conversion for sale in lots is a commercial bond. Since five years have passed since the lessee of the apartment in this case could apply for approval for conversion in lots, the lessee’s right to apply for approval for conversion in lots has expired due to the expiration of

In the survey conducted by the Plaintiff against lessees, the majority of lessees expressed that they did not intend to make a conversion in lots, and applying for approval for conversion in lots at the expiration of about 8 years from the time when the right to apply for approval for conversion in lots was newly established, and at the expiration of 15 years from the time when the mandatory rental period of the apartment of this case

D. Article 21(4) and (10) of the former Rental Housing Act, Article 23(8) of the Enforcement Decree of the Rental Housing Act (wholly amended by Presidential Decree No. 26763, Dec. 28, 2015); Articles 14 and 9(1) [Attachment 1] [Attachment 1] of the Enforcement Rule of the Rental Housing Act (amended by Ordinance of the Ministry of Land, Infrastructure and Transport No. 270, Dec. 29, 2015; hereinafter “former Enforcement Rule of the Rental Housing Act”) were calculated as “the arithmetic mean of the appraised value with construction costs” under subparagraph 1(b) of [Attachment 1] of the former Rental Housing Act. However, at the time of the lease of the apartment of this case, the Plaintiff’s mandatory lease period cannot be set for 10 years, and as a result, the lease period of the apartment of this case exceeds 10 years.

E. Defects in the consent requirement of the lessee

1) Only the lessee entitled to preferential conversion under Article 21(1) of the former Rental Housing Act may file an application for approval of conversion for sale in lots under Article 21(5). Therefore, if a lessee is excluded from a lessee who is not entitled to preferential conversion for sale in lots, the instant apartment does not meet the consent requirements of at least 2/3 of the total number of lessees.

2) It is difficult to ascertain whether the delegation of authority for sale in lots submitted by the council of lessees’ representatives was based on the intention of the principal, and since many lessees who did not conclude the contract with the Plaintiff were included, they did not satisfy the consent requirements of more than 2

3. Relevant statutes;

It is as shown in the attached Table related statutes.

4. Whether the disposition is invalidated.

A. Lessee's right to file an application for conversion for sale

1) The meaning of the supplementary provision of this case is that Article 21 of the former Rental Housing Act does not apply to rental business operators who already submitted a plan for conversion for sale after the lapse of the mandatory rental period, and it applies to rental business operators who will begin procedures for conversion for sale after the lapse of the mandatory rental period

[See Constitutional Court en banc Order 208Hun-Ma581, 582, Jul. 29, 2010] The plaintiff asserted that Article 21 of the former Rental Housing Act does not apply to "rental business operators for whom the mandatory rental period has lapsed" in light of the purport of the above decision of the Constitutional Court. However, the supplementary provision of this case provides that the application of Article 21 of the former Rental Housing Act shall be decided on the basis of "Submission of a plan for sale conversion or permission for sale conversion" rather than "the expiration of the mandatory rental period," and the above decision of the Constitutional Court also ruled that the application of the former Rental Housing Act shall vary depending on whether the former Rental Housing Act was submitted at the time of enforcement of the former Rental Housing Act.

3) Therefore, insofar as the Plaintiff did not submit a plan for conversion for sale in lots at the time of the enforcement of the former Rental Housing Act, or applied for permission for conversion for sale in lots, it is reasonable to deem that the instant apartment is entitled to apply Article 21 of the former Rental Housing Act to the lessee, and therefore,

B. Whether the prescription of the right to apply for approval for conversion for sale expires

1) The Act providing that a rental house with the purpose of supplying a house with lower price than the market price to homeless people provides various benefits to a construction rental business operator by lending the National Housing Fund at a long-term low interest and providing housing sites preferentially to him/her in order to facilitate the construction of rental housing. In addition, there are several regulations to protect lessee by limiting the sale of rental housing during the mandatory rental period and allowing the rental business operator to subscribe to a guarantee for rental deposit, prohibiting the rental business operator from establishing a mortgage, lease on a deposit, etc., and setting separate standards for lease conditions, such as the lessee’s qualification, selection method, lease deposit, rent, etc., from the announcement stage of tenant recruitment to include rental business operators in the standard rental contract, and allowing the rental business operator to use the standard rental contract separately from the general lease (see, e.g., Constitutional Court en banc Decision 2008Hun-Ma581, 582 (Consolidated) Decided July 29, 2010).

2) Comprehensively taking into account the contents of the aforementioned relevant provisions and legislative purpose of the former Rental Housing Act, whether to apply for approval for conversion of rental housing after the expiration of the mandatory period of lease is left to a rental business operator’s choice. However, if a rental business operator intends to make conversion into lots after the expiration of the mandatory period of lease, he/she is obligated to make conversion into lots first to lessee. If a rental business operator fails to apply for approval for conversion into lots within the prescribed period after the expiration of the mandatory period of lease, a lessee may apply for approval for conversion into lots with the consent of at least 2/3 of the total number of lessees. If a lessee does not apply for such conversion into lots, a rental business operator may continue the lease business under the previous condition without any restriction on the mandatory period of lease. However, even if there is still a change in the existing intention or position of a rental business operator or a lessee on conversion into lots, the former Rental Housing Act’s right to apply for conversion into lots at any time can not be seen as being inconsistent with the legislative purpose of Article 2 of the former Rental Housing Act.

C. Whether the principle of good faith is violated

1) The principle of trust and good faith refers to an abstract norm that a party to a legal relationship should not exercise his right or perform his duty in a way that is contrary to equity or trust in consideration of the other party’s interest. In order to deny the exercise of such right on the ground that it violates the principle of trust and good faith, it should have been done to the other party with good faith or with such belief objectively, and the other party’s exercise of right against the other party’s trust should be in a state that is not acceptable in light of the concept of justice (see, e.g., Supreme Court Decision 2002Du11233, Jul. 22, 2004).

2) In light of the above legal principles, since multiple lessees of the apartment of this case did not express to the Plaintiff the intent that they would not actively and definitely file an application for approval for conversion for sale in lots, it cannot be deemed that the lessee’s application for approval for conversion for sale in lots has reached an irrecoverable state in light of the concept of justice solely on the ground that many lessees did not wish to convert for sale in lots in the survey or that a considerable period has elapsed after the introduction of the right to request conversion for sale in lots or the expiration of the mandatory rental period. Therefore, this part of the Plaintiff

D. Whether calculating the pre-sale conversion price is unlawful

Comprehensively taking account of the following circumstances acknowledged as above and the purport of the entire pleadings, it is justifiable for the Defendant to calculate the pre-sale conversion price under subparagraph 1 (b) of attached Table 1 of this case as the arithmetic mean of the construction cost and the appraisal value.

1) The Enforcement Decree of the Rental Housing Act (amended by Presidential Decree No. 19051, Sept. 16, 2005) promulgated on March 17, 2004 newly established a rental housing provision with a mandatory rental period of ten years under Article 9 subparag. 3 of the Enforcement Decree of the Rental Housing Act (amended by Presidential Decree No. 19051, Sept. 16, 2005). Accordingly, Article 9 Subparag. 3 of the Enforcement Rule of the Rental Housing Act (amended by Ordinance No. 471, Sept. 2, 2005) provides that the mandatory rental period of ten years cannot exceed the appraised amount if the mandatory rental period is ten years. In addition, the Enforcement Decree of the Rental Housing Act added a publicly constructed rental house with a mandatory rental period of ten years under the said Rental Housing Act with a view to resolving the issue of housing shortage of the people as soon as the housing price increase each time when the mandatory rental period of five years is 10 years, it is necessary to establish a policy-based rental housing conversion period for 10 years.

2) After the expiration of the mandatory rental period, a rental business operator has the right to decide on whether to apply for approval for conversion for sale in lots at his own discretion, and accordingly, may select whether to continue leasing business for sale in lots. Therefore, even if the rental business operator, whose mandatory rental period was set for five years, started leasing business without applying for approval for conversion in lots, and ten years have passed since it was based on his own choice, it is different from the case where the mandatory rental period was set at ten years

3) At the time of the Plaintiff’s commencement of the instant apartment rental business, the Plaintiff’s choice of the mandatory rental period of the instant apartment as to the instant apartment due to the lack of a provision regarding the rental housing for 10-year rental period. However, on September 22, 1995, the sale price of the report on the terms and conditions of lease submitted by the Plaintiff to the Defendant on September 22, 1995 shall be the arithmetic average of the construction cost and the appraisal value: Provided, That even in this case, the sale price shall not exceed the amount calculated by deducting the depreciation costs during the rental period from the sale price (e.g., the sale price of the relevant apartment at the time of the conversion into Myanmar). As the Plaintiff was aware of the fact that the sale price was calculated as above at the time of the report on the terms and conditions of lease, it cannot be deemed that the criteria for calculating the sale price for rental housing for the rental housing for the Plaintiff, which was more favorable

4) At the time of commencing the lease business of the apartment of this case, the Plaintiff did not have the lessee’s right to apply for approval of conversion for sale in lots, and even if the mandatory rental period was 5 years, the lessee’s right to apply for approval of conversion for sale in lots and the mandatory rental period was newly established, and thereafter, the lessee’s right to apply for approval of conversion for sale in lots should also be calculated at the same time as the lease obligation period is 10 years. However, the lessee’s right to apply for approval of conversion for sale in lots is recognized as stipulated in the supplementary provisions of this case, while the lessee’s right to apply for conversion for sale in lots is recognized as stipulated in the lease obligation provision of this case, there is no basis

(e) Whether at least 2/3 of the total number of lessees consent thereto;

1) Whether the lessee is qualified to preferentially sell to the lessee

According to Article 21 of the former Rental Housing Act, where a rental business operator sells public rental housing constructed with approval for a project plan pursuant to Article 16 of the Housing Act after the expiration of the mandatory rental period, he/she shall do so preferentially to the lessee falling under any subparagraph of paragraph (1) (paragraph (1). A rental business operator who intends to convert the above constructed rental housing into sale shall apply for approval for conversion of sale to the head of a Si/Gun/Gu (hereinafter referred to as the "Mayor, etc.") along with the documents prescribed by Ordinance of the Ministry of Land, Infrastructure and Transport (paragraph (3). Upon receipt of such application, the head of a Si, etc. shall approve the conversion to sale within 30 days (paragraph (4). (7) and where a lessee fails to comply with the conversion to sale after obtaining approval for the conversion to sale, the rental business operator may sell the relevant rental housing to a third party (Article 13(1) of the former Enforcement Rule of the Rental Housing Act). In addition, Article 13(1) of the former Enforcement Rule of the Rental Housing Act, which intends to apply for sale by dividing the number of housing to the above form.

In addition to the forms and contents of the regulations on the approval for conversion of sale in lots and preferential sale of rental housing, ① the former Rental Housing Act does not stipulate that the lessee should first purchase the rental housing to be converted for sale in lots and the rental housing that can be sold to a third party when the mayor, etc. approves the conversion of sale in lots of rental housing, and does not stipulate that the form of the application for approval for conversion in lots should include only the number of preferential sale and the number of general supply households. ② The documents required to attach the application for approval for conversion in lots to sale in lots under Article 13(1) of the former Enforcement Rule of the Rental Housing Act are not sufficient to examine the existence of the right to preferential sale in lots of the households applying for conversion in lots. ③ According to Article 21(7) of the former Rental Housing Act, the lessee holding the right to preferential sale in lots can first choose whether he/she complies with the number of houses to be converted to sale in lots within six months after the approval for conversion in lots, and it can be said that the lessee is not subject to prior approval for conversion in lots and the above.

Therefore, a lessee under Article 21(5) of the former Rental Housing Act is not limited to a lessee who has the right of preferential conversion, but does not need to specify a lessee who has the right of preferential conversion in applying for approval for conversion for sale for sale for sale for sale for sale for sale, and even if a lessee who has no right of preferential conversion for sale for sale was classified as a household for conversion for sale for sale for sale for sale in lots with priority, approval for conversion for sale for sale for sale in lots is not unlawful (see Supreme Court Decisions 2012Du20304, Mar. 26, 2015; 2013Du3276, May 29, 2015). The Plaintiff’s assertion that a lessee who is not entitled to preferential conversion for sale does not have the right of consent to the application for approval for conversion for sale in lots for

2) In order to apply for approval for conversion of the number of lessees who agreed to an application for approval for conversion of the apartment of this case into parcelling-out, 190 households (i.e., 285 households X 2/3). In full view of the facts recognized earlier, the Plaintiff’s assertion that 200 households out of the total number of lessees of the apartment of this case agreed to entrust the president of the council of lessees’ representatives with all rights to conversion of the apartment of this case into parcelling-out among the 285 households. The council of lessees’ representatives of the apartment of this case decided to apply for approval for conversion into parcelling-out of the apartment of this case by holding a general meeting of occupants on December 4, 2015, and can be recognized as having applied for approval for conversion into parcelling-out on May 23, 2016 to the Defendant on May 23, 2016.

5. Conclusion

The plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.

The presiding judge and the subordinate judge

Judges Doo-Ba

Judges Choi Jae-ra

1) Article 21(5) recognizing the lessee’s right to apply for approval for conversion for sale in lots was newly established on March 21, 2008, and at the time of its establishment.

When a borrower can file an application for approval for conversion for sale in lots, the occurrence of reasons, such as default, bankruptcy, etc. after the expiration of the mandatory rental period.

one year or more respectively after the date, "Dokdo" on December 29, 2009 as "Dokdo, etc.", and "each year or more" as "Dokdo, etc.", respectively.

Since it was changed to "not less than 6 months", the statute was indicated as above. Provided, That December 29, 2009 as above.

Since the content of the amendment is not directly related to the issue of the instant case, it is below the amendment considering the content of other relevant Acts and subordinate statutes, etc.

the Rental Housing Act (Law No. 13499, Aug. 28, 2015), the applicable law, shall be wholly amended to the Special Act on Private Rental Housing (Act No. 13499,

The term "former Rental Housing Act" is only indicated as the term "former Rental Housing Act."